Why Nations Fail Begins in the Village: The Ethos of Institutions

In 1958, Edward C. Banfield published a book about a small town in southern Italy. The Moral Basis of a Backward Society is not a theory of civilizations; it is an ethnography of “Montegrano”—a pseudonym for the Basilicata town of Chiaromonte—where the public fountain went unrepaired, not because the state had collapsed, but because no one trusted the neighbors to help. Collective ventures dissolved because each household assumed the others would defect. Banfield called the prevailing norm “amoral familism”: the maxim that one should “maximize the material, short-run advantage of the [family], assuming that all others will do likewise” (Banfield, 1958). The Italian idiom for this mentality is campanilismo: loyalty bounded by the bell tower.

More than fifty years later, Daron Acemoglu and James A. Robinson offered a sweeping comparative history in Why Nations Fail (2012). Their claim: institutions determine prosperity. “Inclusive” institutions—broadly accessible, rule-bound, and responsive—create incentives to invest and innovate; “extractive” institutions concentrate power and wealth, stifling initiative. Their stage is vast—Rome and the Congo, the English Revolution and the Ottoman Porte—but the moral drama is familiar.

At first glance, Banfield’s dusty alleys and Acemoglu & Robinson’s empires seem to inhabit different worlds. One is a village ethnography, the other a grand history of states and elites. Yet read together, they converge on a single truth: institutions stand or fall on ethos—the lived moral orientation of a community. The logic is the same at both levels. In Banfield’s Montegrano, families pursued short-term advantage, distrusted their neighbors, and allowed public goods to decay. In Acemoglu and Robinson’s history, elites clung to power for immediate gain, assumed rivals would dispossess them, and designed systems that strangled the common good.

At first glance, Banfield’s dusty alleys and Acemoglu & Robinson’s empires seem to inhabit different worlds. [...] Yet read together, they converge on a single truth: institutions stand or fall on ethos.

Both amoral familism and extractive institutions describe environments where fear of loss, envy of others, and defensive self-interest erode the trust required for cooperation. One operates at the level of households in a village; the other at the level of ruling classes in states. But both converge on the same insight: without ethos, institutions become arenas of suspicion and extraction, not cooperation and growth. The scales differ, and causality can run both ways, but the lesson converges: nations (and villages) fail not only through bad design but through the erosion of the moral habits that give institutions life.

Both amoral familism and extractive institutions describe environments where fear of loss, envy of others, and defensive self-interest erode the trust required for cooperation. One operates at the level of households in a village; the other at the level of ruling classes in states. But both converge on the same insight: without ethos, institutions become arenas of suspicion and extraction, not cooperation and growth.

Banfield’s portrait drew criticism for its severity. Robert D. Putnam’s Making Democracy Work (1993) demonstrated that Italy’s civic traditions vary dramatically by region and that institutional performance tracks associational life. Yet Banfield documented in vivid colors something durable in Montegrano: the inability to look beyond kin and bell tower. “Many attempt to hinder their neighbors from succeeding,” he observed, “believing that others’ good fortune would inevitably harm their own interests.” The unrepaired fountain became an emblem of a society with too little civic trust and too many defensive calculations. Catholic social teaching, with its call to solidarity, is addressed precisely to this constriction: an ethic of civic friendship that extends obligation beyond the campanile to the common good (Maritain, Man and the State, 1951).

Acemoglu and Robinson extend the same logic to states. What Banfield described as suspicion among neighbors, they describe as elites designing systems that assume exploitation and perpetuate distrust. In villages, families refuse to collaborate because they expect cheating; in nations, rulers hoard power because they fear that sharing it means dispossession. Both cases reveal self-fulfilling equilibria: once distrust is the baseline, cooperation collapses; once extraction is normalized, reform is perilous. Institutions cannot endure on parchment alone. As James Robinson has explained, institutions include “rules that humans create … which can be informal—almost like social norms—not just written down in the constitution” (Robinson, Social Science Bites interview, 2018). And formal structure rests on moral substructure.

In villages, families refuse to collaborate because they expect cheating; in nations, rulers hoard power because they fear that sharing it means dispossession. Both cases reveal self-fulfilling equilibria: once distrust is the baseline, cooperation collapses; once extraction is normalized, reform is perilous. Institutions cannot endure on parchment alone.

This becomes clearer when we revisit the much-debated settler hypothesis. In “The Colonial Origins of Comparative Development” (2001), Acemoglu, Johnson, and Robinson emphasized settler mortality: where Europeans could survive, they transplanted inclusive institutions; where mortality was high, they imposed extractive regimes. Mortality explains conditions of founding, not the durability of order. Settler societies carried more than statutes and courts; they brought civic practices: New England town meetings, congregational self-governance, voluntary cooperatives, neighborhood militias. These rhythms of association taught people to deliberate, bind themselves by rules, and accept obligations beyond household and hamlet. They formed a moral grammar of contract, accountability, and restraint. Where such habits took root, inclusive institutions endured; where they were absent, even careful charters decayed into patronage and favoritism. Montegrano presents the inverse: villagers trapped by interesse—short-term advantage—so that every neighbor’s success became a threat. The settler township and the Basilicata village are mirror images: in one, civic life was practiced; in the other, it never began.

The settler township and the Basilicata village are mirror images: in one, civic life was practiced; in the other, it never began.

What Banfield observed in a village and what Acemoglu & Robinson traced across empires is not mere sociology; it is a lesson in the very grammar of freedom to which we at Concordia Discors Magazine return again and again.

Think of institutions are architecture; ethos is the load-bearing steel. When ethos weakens—when citizens retreat to the bell tower, when elites treat power as private property—arches that looked solid buckle. Four conditions might capture the ethos that institutions and human flourishing require.

Recognition (Berlin). Isaiah Berlin’s enduring insight was not a tidy taxonomy of liberties but the civic stance that keeps liberty from devouring itself. “Freedom for the wolves has often meant death to the sheep” (Four Essays on Liberty, 1969). Liberty endures only where citizens recognize others’ claims and accept limits on their own. In Montegrano, recognition failed: even small tasks—repairing a fountain, maintaining a road—collapsed because each household assumed the others would defect. Negative liberty (“leave me alone”) is hollow when there is no common life to be left alone in; positive liberty (“direct my life”) is inconceivable when horizons shrink to the bell tower. Banfield shows this from below. Acemoglu & Robinson show the same refusal from above: elites, fearing loss, block inclusion. Both reveal liberty’s dependence on civic recognition.

Appearance (Arendt). Hannah Arendt gives this dependence political form. “Action,” she writes, “is the only activity that goes on directly between men … and corresponds to the human condition of plurality” (The Human Condition, 1958). Freedom is not a private possession; it exists when people appear before one another to deliberate and act. Banfield’s villagers, driven into the private by suspicion, exemplify the collapse of this practice. By contrast, the settlers’ town meetings and congregations were schools of appearance: they made public life visible and durable. From below, Banfield reveals its absence; from above, Acemoglu & Robinson show that inclusive orders endure only where such practices take root.

Correction (Popper). Karl Popper supplies a mechanism. The strength of democracy, he argued, is not perfect rulers but the ability to “get rid of bad rulers without bloodshed” (The Open Society and Its Enemies, 1945). That requires institutions built for correction—criticism without fear, procedures that invite challenge, humility before error. But procedures work only if citizens bring the ethos that sustains them: the habit of conceding error, the willingness to lose without burning the forum. Extractive orders persist because correction never becomes cultural expectation: dissent is branded treason, defeat catastrophe. Banfield observed the same logic in miniature: trust is dangerous, and weakness invites exploitation. Top and bottom converge: without correction, rules ossify and suspicion becomes the regime.

Friendship (Maritain). Jacques Maritain names the virtue that binds the others: "civic friendship". Democracy, he argued, requires treating adversaries as partners in a shared good (Man and the State, 1951). Catholic social thought made this solidarity its cornerstone, complemented by subsidiarity, the protection of mediating institutions—parishes, guilds, cooperatives—where such friendship is learned. Banfield shows what happens without it: envy and rivalry hollow the village. Acemoglu & Robinson show the macro version: elites who refuse solidarity design systems that concentrate wealth and power. Institutions without friendship corrode into faction and extraction.

The contemporary resonance is sharp. Democracies today show symptoms of both Banfield’s village and Acemoglu’s extractive trap. Polarization turns disagreement into enmity; social media rewards performance over seriousness; elites exploit division. Institutions still stand, but their moral basis frays. Pluralism becomes precarious when citizens refuse recognition, withdraw from appearance, reject correction, and deny friendship. The dry fountain of Montegrano echoes in schools mistrusted, civic forums abandoned, elections litigated in bad faith. Without ethos, law rusts. Without solidarity, liberty hollows into license.

The dry fountain of Montegrano echoes in schools mistrusted, civic forums abandoned, elections litigated in bad faith. Without ethos, law rusts. Without solidarity, liberty hollows into license.

The conclusion is not despair but discipline. Banfield and Acemoglu, read together, remind us that nations fail not by accident but by the slow decay of moral and institutional life. Berlin teaches recognition across real differences; Arendt calls us back into public action; Popper demands institutions capable of correction; Maritain insists on civic friendship to hold it together. None of this can be legislated into being. But it can be taught, practiced, defended.

Banfield and Acemoglu, read together, remind us that nations fail not by accident but by the slow decay of moral and institutional life.

Repairing the fountain is not only a metaphor. It is the daily work of renewing the small practices that make cooperation plausible: a school board meeting conducted in good faith, a parish committee that keeps promises, a voluntary association that binds strangers to common tasks, a political party that concedes defeat without scorched earth. These are the places where the ethos of institutions is stored or squandered.

If Why Nations Fail begins in the village, it ends there too—where citizens decide whether to trust, to appear, to correct, and to befriend. The defense of liberty cannot be reduced to clever design. It requires citizens willing to repair the fountains—not only of stone, but of civic life. Fail in this, and we risk not just the poverty of one Basilicata town, but the failure of nations themselves. [GC]

If Why Nations Fail begins in the village, it ends there too—where citizens decide whether to trust, to appear, to correct, and to befriend. The defense of liberty cannot be reduced to clever design. It requires citizens willing to repair the fountains—not only of stone, but of civic life.